Grocon empire run by Daniel Grollo goes into administration
The once mighty Grocon building empire run by prominent Melbourne builder Daniel Grollo has fallen into administration after heavy losses.
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Australian building giant Grocon is on the brink of collapse, owing up to $60 million in debt and forcing 52 companies in the group to appoint administrators.
Daniel Grollo says his father Bruno is “dismayed” at the business's’s financial difficulties, which are being blamed on a $270 million dispute involving James Packer’s Crown Casino development at Barangaroo.
However, Grocon had a series of failures in recent years, including a cost blowout on the Commonwealth Games Village that led them to be banned from building in Queensland.
Mr Grollo, 50, yesterday told News Corp Australia that his father, who handed on the company to him after a prolific career that included building Melbourne’s iconic Rialto Tower and Crown Casino, was dismayed at the circumstances.
“He’s no different to me when I spoke to him. It’s a bit of dismay about how this has happened, he’s been hearing about Barangaroo for seven years,” Mr Grollo said.
“My relationship with dad is fine.”
Grocon bought into Barangaroo in 2013, spending $40m with hopes to build a $1.4 billion apartment tower with Canada’s Oxford Property Group and a shopping centre with Westfield owner Scentre Group.
But it had to sell out when it lost the right to block Mr Packer’s views and that of a Lendlease development.
Infrastructure NSW has rejected the claim in the NSW Supreme Court and demanded that $1 million be held on trust because it feared Grocon would be unable to pay its costs if it lost the case.
Grocon also had to tell the Australian Securities and Investments Commission last month that it could not pass a motion that confirmed it could pay its bills, while investors in a $120 million Melbourne apartment tower, including the billionaire Liberman family, threatened to tear up their contract this week.
The company’s collapse marks a significant change in fortunes for Grocon.
From concreting suburban swimming pools in the sixties, to rebuilding Darwin after Cyclone Tracy in the seventies and to city skyscrapers in the eighties and beyond, Grocon became one of Australia’s largest private builders.
Three generations of the Grollo family, starting with Luigi in 1954, turned it into a property dynasty that was passed on to Bruno and Rino, and then on to current boss Daniel.
He took full control of the construction company in 2012, with brother Adam and sister Leanna taking over the property portfolio management.
Subcontractors across the country were likely to be hit, with up to 100 owed money, including the milk supplier, on the Aesop project.
Grocon had a major dispute with the CFMEU in 2012 and bad blood for several years, but Mr Grollo said that played no part in his current problem.
Mr Grollo said that the Infrastructure NSW deal sank the company, claiming that previous assurances he could build without height limits were stripped away.
“I find it unconscionable,” he said.
“We tried to do as best as possible with Infrastructure NSW. Scheme after scheme, we supported them in their court case with Crown and Lend Lease.
“And then they did a deal with Crown and Lend Lease.”
That deal protected Crown and Lend Lease’s rights to views of Sydney Harbour, which were crucial for the value of its buildings on the site.
Grocon was yet to sign up with an administrator, which was likely to happen over the weekend.
Federal Treasurer Josh Frydenberg set up new US-style bankruptcy laws in September that allowed companies to keep trading as the coronavirus pandemic hit.
However, Mr Grollo said that was not a factor in the company’s decision to go into administration.
He said that the Infrastructure NSW case could net the company between $60 to $190m.
“At the bottom end of that range it covers all creditors,” he said.
“The ATO is the biggest creditor in our system. Our intention is to ensure that creditors get full payments.”
Property industry sources told News Corp Australia that there were concerns about Grocon for several years.
The Gold Coast Commonwealth Games development was a major failure, with Grocon banned from building in Queensland and fined $27,000 for failing to pay subcontractors.
The company’s stake in the project had to be sold off to Abu Dhabi investors.
Mr Grollo said that a Melbourne office tower, being built for Aesop, and the Ribbon at Darling Harbour in Sydney, which will replace the IMAX building, would not be part of the administration.
The company was also continuing to invest in build-to-rent towers with the Singaporean government, which were not due to be completed until 2022.
Mr Grollo was hopeful international students would be back in Australia by then to increase demand for the properties.
Grocon has been a major builder for decades.
In Melbourne it built the Rialto and Eureka Towers, Crown Casino, 101 Collins Street, AAMI Stadium and redeveloped the MCG.
In Sydney, it built towers at 1 Bligh Street, 161 Castlereagh and 1 Martin Place, the former GPO building now home to Macquarie bank.
In Queensland it also built the Oracle at Broadbeach, 480 Queen Street in Brisbane and 55 Elizabeth Street Brisbane, which was leased by the ATO.
In South Australia, the company redeveloped a RAAF base north of Adelaide.
stephen.drill@news.co.uk
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